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NCREIF Total Farmland Index Posts Seventh Consecutive Quarter of Record Value

The National Council of Real Estate Investment Fiduciaries (“NCREIF”) released the NCREIF Farmland Index’s (“NFI”) results for Q4 2022. The number of properties in the NFI increased by 9 in Q4 2022 bringing the total property count to 1,315, and the NFI’s market value reached a new record of $15.3 billion.  At the end of Q4 2022, the NFI was comprised of $9.4 billion (62%) of annual cropland and $5.9 billion (38%) of permanent cropland. Directly operated permanent crop properties represented $4.3 billion (28%) of the NFI, while leased cropland properties accounted for $1.6 billion (10%).

Regionally, the Pacific West (39%), Delta States (19%), and Corn Belt (13%) comprised over 70% of the NFI, collectively. The other 29% is represented by the Mountain (8%), Pacific Northwest (7%), Southeast (5%), Lake States (4%), Northern Plains (3%), Southern Plains (2%), Appalachian (1%), and Other (<1%).

NCREIF Farmland Index

In Q4 2022, the NFI reported strong quarterly performance, surpassing the Q4 results experienced in 2021.  Over the prior four quarters, the NFI’s cumulative total return was 9.64%, resulting from an income return of 3.29% and appreciation of 6.20%. Annual cropland’s rolling 4-quarter return was 14.43%, even with the Q3 2022 rolling 4-quarter return. Permanent cropland weakened, posting another positive quarter of total return, reporting a rolling 4-quarter total return of 2.61%.

Rolling 4-Quarter Total Returns

Annual Cropland Subindex

Over the past four quarters, the annual cropland sub-index generated an income return of 3.75% and appreciation of 10.40%, resulting in a total return of 14.43%.  This result was even with previous quarter's rolling 4-quarter return (14.43%).  

• From a regional standpoint, total returns over the past four quarters ranged from 27.99% in the Corn Belt to 4.84% in the Pacific Northwest. The Corn Belt, Lake States, Delta States, and Southeast all reported rolling 4-quarter total returns exceeding 10%.

• Income returns for the past four quarters ranged from 4.52% in the Lake States to 3.32% in the Delta States. As shown in the chart below, the income returns for annual cropland have been stable for 20 years despite varying rates of appreciation.

• Appreciation returnsin the past four quarters ranged from a high of 23.71% in the Corn Belt to a low of 0.80% in the Pacific Northwest. The highest appreciation returns in Q4 2022 were experienced in the Corn Belt (7.83%) and the Lake States (7.03%).

Rolling 4-Quarter Annual Cropland Returns

Permanent Cropland Subindex

As of Q4 2022, the permanent cropland sub-index reported a rolling 4-quarter income return of 2.61% and appreciation of 0.0%, resulting in a total return of 2.61%. Recent returns produced by the permanent cropland sub-index are near 20-year lows. It is noteworthy that over the period represented in the chart below, almonds and wine grapes have comprised over 50% of the permanent cropland sub-index on average. The chart below demonstrates permanent crop returns have experienced periods of significantly higher and lower returns as compared to the annual cropland sub-index.

Rolling 4-Quarter Permanent Cropland Returns

Permanent Cropland Commodities and Management Types

Among permanent cropland properties, apples accounted for the highest return over the prior 4 quarters at 12.3% while almonds accounted for the lowest return, -2.3%. The rolling 4-quarter returns for most major permanent crop categories continue to lag their 5-year and 10-year returns. Apples (13.07%) and pistachios (2.07%) produced the strongest permanent crop returns in Q4 2022. On the other hand, almonds (-2.90%) and citrus (-0.10%) represented the lowest permanent crop returns during the quarter. The rolling 4-quarter performance of leased permanent cropland exceeded the performance of directly operated permanent crops by 615 basis points, outperforming in terms of income and appreciation.

The NCREIF Farmland Index includes data provided by the following firms: PGIM, Manulife Investment Management, Nuveen Natural Capital, UBS Farmland Investors LLC, Gladstone Land Corporation, US Agriculture, and Farmland Opportunity.

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